Country's fiscal deficit continues to ring alarm bells and exceed the budget estimates in the first 10 months of the current fiscal. The deficit, overshooting the budget estimate by 107% and calling for harder measures by the government has risen to Rs 5.68 lakh crore in April-January period as against the annual budget estimate of Rs 5.31 lakh crore. The deficit was 98.2% during the same period a year ago. The overshooting of fiscal deficit could be mainly attributed to subdued revenue realization.
Notably, while presenting the annual Budget 2015-16, Finance Minister Arun Jaitley underscored that the government would meet the budgeted fiscal deficit target of 4.1% of GDP for the year ending March 31 through spending cuts and higher tax collection. The fiscal deficit target for current fiscal would be the lowest in seven years. However, government has increased the 2015-16 target to 3.9% of the GDP as against 3.6% set earlier, as part of the fiscal consolidation roadmap. Also the government stated that it would be reducing deficit to 3% of GDP by 2017/18 fiscal year, which is a year later than expected.
The fiscal deficit data came on the day when the government also published details of its historic monetary policy framework agreement with the Reserve Bank of India, whereby the central bank will aim to bring retail inflation below 6% by January 2016 - and to around 4% by fiscal 2016-17.